After rising sharply last week, mortgage rates continued to increase this week, erasing some of the progress made on the housing affordability front in the past few months.

The stronger than expected employment report, a surprisingly large Consumer Price Index increase and robust retail sales data are putting upward pressure on bond yields and the mortgage rates they tend to influence. But part of this uptick in the data could be overstating the strength of the US economy. Residual, or left over, seasonality that remains in already deseasonalized data may be part of the reason for the large January rebound. This residual seasonality introduces additional uncertainty for investors and policymakers.

Next week, new data from the Fed’s preferred inflation gauge – the PCE Price index – will likely cause more policy uncertainty and higher mortgage rate volatility.